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IAG looks to lift insurance premiums as it braces for more natural disasters
By Millie Muroi
Insurance Australian Group (IAG) will lift premiums in the year ahead as it braces for further increases in inflation, reinsurance costs and the possibility of natural disasters.
The company behind insurance brands including NRMA and CGU is the latest insurer to flag climate change as an increasing risk, with the group’s chief executive Nick Hawkins saying the higher frequency of natural disasters and increased costs of home and motor claims put pressure on the company’s profits.
“The 2023 financial year was another significant perils year, and we saw the devastating impacts of multiple large-scale events across Australia and New Zealand on our customers and communities,” he said.
Home insurance premiums have soared over the past year due in part to events such as the 2022 floods in south-east Queensland.Credit: Getty Images
Despite posting net profit of $832 million, up 140 per cent, Hawkins said IAG’s underlying insurance margin shrank from 14.6 per cent in the previous year to 12.6 per cent in the 2023 financial year, which he said was a result of inflation in home and motor claims costs and a higher allowance for natural disasters.
IAG’s gross written premium – a combined measure of premiums and volume of insurance policies – grew 10.6 per cent over the year, mainly driven by increased premiums.
Hawkins said the move to warmer and dryer conditions meant there would probably be a “shift away from rain dominated claims” but that IAG had increased its natural disasters’ allowance by 26 per cent to $1.1 billion for the 2024 financial year.
The company guided “low double-digits” growth for the year ahead which it said would mostly be driven by increased premiums.
Baby formula maker A2 Milk profits lift
By Jessica Yun
China’s declining birth rates and its shrinking baby formula market didn’t stop infant formula maker A2 Milk from notching higher profits and earnings as it successfully pivoted its business to recover from COVID disruptions and increase market share and sales in China.
However, it has warned about challenges ahead in the Asian country, where fewer babies are being born, competition is expected to get tighter, and prices are expected to come under further pressure.
A2 Milk CEO David Bortolussi. Credit: Adam Firth
A2 Milk revealed a 26.9 per cent uptick in net profit after tax to $155.6 million for the 2023 financial year, while earnings rose 11.8 per cent to $219.3 million.
Revenue increased by 10.1 per cent to $1.6 billion. It did not announce any dividends.
But its earnings have undershot some expectations and the gloomy outlook has not inspired shareholders, who sent its share price down 10.3 per cent in morning trading.
“The market conditions have clearly been more challenging than we expected,” A2 Milk CEO David Bortolussi told investors and analysts this morning.
Qantas class action launched over COVID-19 flight credits
By Amelia McGuire
A class action has been lodged against the Qantas Group in the Federal Court after more than $2 billion in flights were cancelled due to the COVID-19 pandemic.
Echo Law submitted the claim on behalf of customers today, alleging the airline has failed to be transparent and immediately issue refunds to customers when the flights were cancelled.
“While COVID posed major disruption to air travel and resulted in cancellations that no airline wished to make, that is no excuse for Qantas to take advantage of its own customers and effectively treat them as providers of over $1 billion in interest-free loans,” Echo Law partner Andrew Paull said.
Outgoing Qantas boss Alan Joyce.Credit: Brook Mitchell
“We allege Qantas breached the law by failing to be transparent and immediately issue refunds to customers when flights were cancelled. Instead, Qantas held on to its customers’ money and pushed out travel credits with strict conditions, which we allege it was not entitled to do. It now needs to be held accountable and refund that money with interest.”
Qantas and its budget subsidiary Jetstar have been under pressure to reduce the sum of passenger credits, which totalled $2 billion over the two years to October 2021.
The airline has been accused of inflexible refund policies and poor customer service by some travellers who have attempted to rebook since flying resumed.
Qantas stood by its approach to refunds and credits, and said all customers on flights cancelled by the airline because of border restrictions were eligible for a cash refund of their credit should they prefer.
The airline launched multiple initiatives to get customers to opt for a refund or travel credit since amassing billions of dollars in unused customer fares in 2020.
It has extended the deadline for when the COVID-19 travel credits are set to expire three times, with customers now able to use their travel credits until the end of 2024 so long as the trip is booked by December 31 this year.
Flights cancelled by passengers are not covered by this policy or the amended expiry date.
Qantas resumed its less flexible pre-COVID approach to refunds and flight credits on October 1, 2021, meaning those who cancelled their flights after this date are restricted to a flight credit to be redeemed within 12 months.
As it stands, the airline business is sitting on about $400 million in unused credits.
Albanese denies ‘jinxing’ Matildas with public holiday talk
By Caroline Schelle
Turning now to the prime minister, who pledged $200 million to women’s sport this weekend and has spoken about the success of the FIFA Women’s World Cup.
Anthony Albanese announced the Play Our Way program on Saturday in the wake of the Matildas success, which Labor says is one of the biggest ever boosts to women’s sport.
He told Melbourne commercial station Nova that the money would be available from next year.
Prime Minister Anthony Albanese looks on during the FIFA Women’s World Cup on Saturday. Credit: Getty
“It’ll be available for local government, community organisations, not for profits, and sporting organisations to provide funding so that the explosion that we fully expect to happen in sport participation, as a direct result of the Matildas, can be supported but across all sports,” Albanese said.
The prime minister was asked whether the jinxed the Matildas by calling for a public holiday, but he says “not at all”.
“It was about the momentum that the Matildas were showing right around the country and I just think they inspired all of us, but particularly young girls and young boys.”
Opposition Leader Peter Dutton also supported the move, after saying a Coalition government would put $250 million towards grassroots sports if elected.
“I think it’s a good idea. I think it’s a good lasting legacy – not just for the work of the Matildas – but the Diamonds, the Ashes team that won recently,” he said on Sydney radio station 2GB earlier.
“It’s a lot of money and I think the point otherwise is that parents are having to pay for these upgrades and renovations at facilities right around the country, so it saves those parents from paying higher fees or levies that are levied against them.”
Dutton said the push for the public holiday would have cost the economy $2 billion, which was a “huge impost with not much benefit”.
Westpac makes $1.8b profit in June quarter as mortgage competition continues
By Clancy Yeates
In breaking news, Westpac notched up $1.8 billion in profits in the June quarter, the banking giant said on Monday, as it also reported ongoing pressure from stiff competition in mortgages and rising staff costs.
The bank said today its operating revenue had been resilient in the three months to June, as it pointed to the ongoing rivalry between banks in the home loan market, where lenders have been competing fiercely on price.
Westpac said profits were $1.8 billion for the June quarter.Credit: Will Willitts
The trading update said the bank’s core net interest margin - which compares funding costs with what the bank charges for loans - was 1.86 per cent, a 4 basis point decline from the March half, reflecting ongoing mortgage competition.
As all banks face rising costs from a higher wages bill and other inflationary pressures, Westpac said its expenses had risen by about 5 per cent compared with the March half, and it pointed to cost-cutting measures.
Spender says housing inequality key issue facing young Australians
Circling back to independent MP Allegra Spender, who has been advocating for an intergenerational approach to fix housing inequality.
It comes as the government is set to release its intergenerational report this week, which will reveal the financial outlook will be tougher, as a slowdown in productivity growth translates into a hit to living standards.
“I think that housing inequality when I look at future generations, we’re leaving them with debt ... climate change, climate challenges ...and housing is probably the biggest issue,” she said.
Allegra Spender says housing affordability is a key issue for young people. Credit: Rhett Wyman
“For future generations we have to change our housing policy, currently ... the average Australian earns more on their house than they do on their income, and that just doesn’t work long term.”
The Wentworth MP acknowledged many Australians benefitted from high property prices, but people shouldn’t assume that’s going to go forward in the future.
“I think we absolutely have to have reckoning on this and say ... it locks out future generations, and if we’re the country of the fair go ... young people who are working hard, should be able to look down and see financial security ahead of them, and we should all be bought into that,” Spender said.
She said there should be a national conversation about changes to concessions that older Australians receive.
“I’m not specifically talking about negative gearing in this instance because it isn’t actually a tax that makes ... as big an impact on housing as everybody thinks,” the MP said.
She said many older Australians were concerned about the future, including housing, climate change and the tax system which burdened young people.
O’Connor backs decision to buy Tomahawks missiles
By Caroline Schelle
Earlier, Skills and Training Minister Brendan O’Connor backed the decision to purchase Tomahawk long-range missiles from the United States.
He told ABC TV the capability was needed, and it was an important asset for the country’s navy and air force.
The Albanese government will announce today that it is acquiring over 200 Tomahawk cruise missiles, the third nation to secure the weaponry.
Labor’s Skills and Training Minister Brendan O’Connor.Credit: Alex Ellinghausen
“That is important and the other dimension to this is that whilst we are acquiring these from the United States, we are looking at building our own defence industry capability because, over time, we need to be more self-reliant and to defend our nation and our citizens effectively,” O’Connor told the ABC this morning.
He said the decision to buy to missiles arose out of a defence review, and the government moved on it as quickly as it could.
“Given the circumstances we find ourselves, you only have to look at the illegal war in Ukraine, to know that we have to be prepared for any possible contingency.”
Conroy unaware Defence spent $8.5m on consultants for AUKUS regulator
By Caroline Schelle
Conroy was also asked about reporting in this masthead about $8.5 million being spent on consultants for an AUKUS nuclear regulator.
National security correspondent Matthew Knott wrote the Defence Department contract with EY, also known as Ernst & Young, comes amid a growing debate about the federal public service’s reliance on advice from external consultants.
The federal government is establishing a new regulator to oversee safety issues relating to the acquisition of nuclear-powered submarines.Credit: US Navy
But Defence Industry Minister Pat Conroy said he didn’t know about the contract until he was asked about it on RN Breakfast this morning.
“No, no I wasn’t,” he said when asked if he knew about the deal.
Conroy said the Defence Department has many contracts but wasn’t aware of EY being granted the multi-million dollar deal.
“We’ll use consultancies where it makes sense, where they add value, or bring specialist technical expertise, the question is we have to get the balance right, but I haven’t seen that specific report,” he said.
The minister said the government was committed to establishing the submarine agency, which was critical to Australia’s defence.
Conroy says ‘strategic balance’ key in region
By Caroline Schelle
Staying with the Defence Industry Minister Pat Conroy, who was asked about whether he believes China is dominating the region.
“I’m not going to be going into what other countries are doing, but it’s clear that we’re seeing great strategic competition in our region, and it’s appropriate that we respond through increased diplomatic engagement and increasing deterrence in Australian Defence Force,” Conroy told RN Breakfast this morning.
Defence Industry Minister Pat Conroy backs the AUKUS agreement at Labor’s national conference. Credit: Alex Ellinghausen
It comes after comments he made at Labor’s national conference in Brisbane where he told delegates it was against Australia’s interest to have one power dominate the region.
“What I meant is that it’s in our interest to have strategic balance in our region where no one power dominates our region,” the minister said this morning when asked about his comments.
“Where we have a region that is multipolar, where we have a region that is bound by international rules and norms as a middle power that’s in our direct national interest, that’s what my remarks were referring to,” he said.
Tomahawk missile purchase about ‘deterring conflict’: Conroy
By Caroline Schelle
Defence Industry Minister Pat Conroy has spoken about the government’s decision to acquire more than 200 Tomahawk cruise missiles from the United States.
He said this will make Australia the third nation to secure the weaponry, which is capable of hitting targets 1500 kilometres away.
Conroy said the purchase was about “deterring conflict”.
Defence Industry Minister Pat Conroy, in parliament last week.Credit: Alex Ellinghausen
“This is about placing question marks in any potential adversaries’ minds that Australia could respond if challenged,” he told ABC radio this morning.
The minister said it was about ensuring peace and stability in the region, and the “only way” to pursue that was by presenting strength.
He said it was critical for Australia to play a part in contributing to the strategic balance in the region.
“The way you do that is investing in our military capability to deter potential aggression.
“But also investing in diplomacy and international effort through foreign aid, we’re doing both.”
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2023-08-21 00:38:14Z
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